In a big win for Tesla Motors' auto dealership battle, the state of Ohio will allow the automaker to sell its electric vehicles directly to customers. According to AP, Tesla Motors and the Ohio Automobile Dealers Association negotiated the deal Tuesday, and it was approved by a Senate panel.

This means that Tesla can continue selling its $69,900+ Model S sedan EV directly to customers in both of its existing Ohio stores -- which are in Columbus and Cincinnati.

Even better news for Tesla is that it can open a third store Cleveland as well, but it won't be allowed to open any more than that.

The bill also made sure to prohibit other automakers from opening manufacturer-owned stores in the state of Ohio. This ensures that others can't follow Tesla's path and try to get rid of auto dealers altogether.

Tesla CEO Elon Musk said that auto dealerships don't do a very good job at selling specialty cars like Tesla's high-end electric vehicles (Roadster, Model S). Hence, he's looking to run his own Tesla stores around the U.S. where he believes his cars will get a fair shot at being sold.

The problem is that auto dealers don't want to sell Tesla vehicles, and they're also barring Tesla from selling its own vehicles (with the exception of online, where customers can physically touch or test drive the EVs).

Elon Musk [SOURCE: Green Optimistic]

But auto dealers say that they are necessary middlemen between auto manufacturers and consumers. They've insisted that their role provides fair play for consumers when it comes to warranties and service issues.

Tesla was granted authorization by Republican Gov. John Kasich through the Bureau of Motor Vehicles to sell its EVs directly to customers via an issued license.

Earlier this month, it was reported that Ohio auto dealers were supporting a bill that would stop Tesla from opening stores outside of its only two locations in Ohio.

It recently came to light that Ohio Sen. Tom Patton (R-Strongsville) backed the anti-Tesla bill -- called Senate Bill 260 -- which aims to prevent Tesla and any other automaker from "applying for a license to sell or lease new or used motor vehicles at retail." What's interesting is that Patton received at least $42,825 between 2002 and 2013 from state and national auto dealership owners, employees, and political action committees.

But this recent agreement with Ohio auto dealers is a win for Tesla, especially when other states -- like New Jersey -- are giving Tesla the boot.

Earlier this month, New Jersey Gov. Chris Christie’s administration proposed a new rule, which requires a person to have a franchise agreement with an auto manufacturer in order to be granted a license to sell.

A week later, the New Jersey Motor Vehicle Commission voted in favor of the ban of direct auto sales. Tesla already operates two stores in New Jersey, and had plans to open more before this new rule. These now need to become showrooms as of April 1.

On the other side of the country, states like Texas and Arizona are rethinking Tesla's direct sales model (which they currently ban as well) in order to secure Tesla's giant new Gigafactory for EV batteries. The factory aims to supply batteries for up to 500,000 EVs by the year 2020. The gigafactory would cost $5 billion USD, span as much as 1,000 acres, and employ about 6,500 people. It would also largely be powered by renewable energy, hence its need to be in a Southwestern state.

This issue is not even close to a capitalist system. The dealers association (NADA) is a Union which is trying to "protect" it's jobs and members from having to face capitalist competition; this is socialism.

I hate this deal Tesla got from Ohio for one reason only, they got special treatment. They are allowed to sell direct while all manufacturers are forced to be stuck the NADA union. This should be a level playing field, if one company gets advantage they all should have the same advantage, picking winners and losers is terrible policy.

... curious. I've never perceived states like Texas and Arizona (or Ohio, for that matter) as bastions of "socialism". Certainly not, when compared to California, surely? (CA does allow Tesla's direct sales; isn't that also ... curious?)

I think you might be confusing socialism with political free markets... (a.k.a. politicians for sale to the highest bidder; a.k.a. "money = speech, therefore STFU unless you've got some discretionary $Billions to throw about"... oh, and "politics is local", that's to say bribery and/or blackmail are most effective at short range...)

quote: picking winners and losers is terrible policy

What you mean is, it's a very profitable policy for the winners... As for losers, well, it's all about taking personal responsibility for sucking so badly ;P

Private sector unions protect jobs, raise wages, etc SOLELY through collective bargaining agreements with companies. Unions are a free market construct, and compete with non-union workforces. If they make a company too uncompetitive, they effectively self destruct.

NADA is NOT a labor union. Its goal is to enacting and maintaining laws that explicitly outlaw certain competition from entering the market.

quote: If they make a company too uncompetitive, they effectively self destruct.

I've seen it happen where I live. Company and union couldn't agree on new terms, even after the company said they couldn't stay in town under the union's proposed terms. Company folded up its tent and moved to another state as promised. At least the union members stuck together, and that's all that matters, right?

That's what I was told when I lost my job and couldn't find a replacement for 8 years until I moved from Illinois to Florida. Now I make 12k more and work 8 fewer hours a week and everything's air conditioned.